The Digital Essentials, Part 3
Developing a robust digital strategy is both a challenge and an opportunity. Part 3 of the Digital Essentials guide series explores five of the essential technology-driven experiences customers expect, which you may be missing or not fully utilizing.
Last month, I had the opportunity to attend a direct response marketing conference with a friend of mine who’s been in the business for decades. Direct response’s endgame is to create just that – a “direct response” from the consumer, such as a phone call to a toll-free number, click to visit a website, etc. Surprisingly, at the conference I attended, which was called “Titans of Direct Response” (humble title, I know), direct mail (through the post) remains the preferred channel for reaching consumers by this group of marketing professionals.
STOP! DON’T RUN AND HIDE.
Most of us would probably consider direct mail at the bottom of the “marketing totem pole” (or maybe not even on the totem pole) when it comes to offering us a satisfying user experience. But direct response tactics via mail have worked in the past, and I think there are still useful takeaways that apply to the digital space. Here are a few:
1.) Direct response and direct mail are still around, and are still effective.
In 2012, the Chief Marketing Officer (CMO) Council™ found that direct marketing produced $2.05 trillion in sales, representing roughly 8.7% of U.S. GDP. In 2010, The Guardian conducted a study that found that 56% of all direct mail is still opened. CMO Council conducted a similar study in May 2013 that found direct mail retains a conversion rate of 1.1% – 1.4%, versus 0.03% for email, 0.04% for Internet display ads, and 0.22% for paid search[i].
2.) Pretty impressive numbers, right? So WHERE are they coming from?
You’re probably thinking…who out there ever opens any kind of spam mail anymore, let alone has the patience to read it and actually purchase what it’s advertising? Speakers at the Titans conference revealed numbers indicating that although companies see high conversion rates in each of the major markets (New York, Chicago, Los Angeles, Seattle, Dallas, etc.), a large majority of the direct response customer base comes from concentrations in the Midwest, the Southwest, and the Plains states (Nebraska, Oklahoma, Iowa, Kansas, etc.). Most of these high conversion rates are attributed to an older demographic (consumers that grew up ordering via direct mail and infomercials) and lack technical knowledge. Also prominent are regional groups (small town, isolated areas) that have limited access to multiple tech channels for online shopping. Thought-provoking, right? There’s plenty more where that came from, if you’re interested. (See CMO Council for more Direct Marketing facts)
3.) These days, consumers are actually more informed, making them smarter and more selective than ever.
Several of the keynote speakers at the Titans conference referenced the idea of “consumer sophistication.” This concept, as you can probably guess, is evidence of the ever-growing intelligence of the average American consumer due to the explosion of information across the Internet. The more channels they have access to, the more they know, and they research products before they buy. Craig Davis, Chief Creative Officer at J. Walter Thompson, recently discussed the evolution of consumers with HubSpot saying, “Audiences everywhere are tough. They don’t have time to be bored or brow beaten by orthodox, old-fashioned advertising. We need to stop interrupting what people are interested in and be what people are interested in.” This is not to say that consumers who participate in direct response aren’t sophisticated – as mentioned earlier, it’s the demographic factor.
4.) Direct response is inextricably linked to big data.
If you haven’t yet identified the trend here, I’m trying to say that although it’s easy to simply dismiss the old ways of direct response, it still has a place in the world of marketing and advertising. Most of us can agree that direct mail isn’t exactly “cutting edge” anymore, but what can’t be overlooked is the emphasis direct response places on measurable data. In its hey-day, direct response was at the forefront of taking response data from customers and focusing efforts based on that data (hence the name “direct response” marketing). Today, companies such as Netflix rely heavily on data and use it to structure their business models (see Harsha Hegde’s take in this LinkedIn post).
5.) What does this mean for the future?
The Internet has fundamentally changed the way we research and consume products. As with all things, the Internet has evolved with age and it continues to change not only by the day, but by the hour it seems. Veteran direct response consultant Dan Kennedy (not to be confused with Enlighten’s very own Dan Kennedy) acknowledged during his presentation at the Titans conference that the Internet has posed new obstacles for traditional marketing tactics like that of direct response. Although traditional marketing methods continue to prosper today, there is no denying, even among direct response heavyweights, that the landscape is shifting.
This blog post is in no way supposed to serve as some grandiose report on the “state of marketing;” however these numbers were shocking to me, as I consider direct marketing to be outdated. The insight I gained was a reminder to me that it’s important to know about the other realms of marketing and how they are affecting our own.